Repossessions forecast lowered to 65,000

The Council of Mortgage Lenders has reduced its forecast for repossessions for this year from 75,000 to 65,000.

It also expects around 360,000 mortgages to be in arrears equivalent to 2.5% or more of the mortgage balance by the end of the year.

The CML cites lower interest rates together with more forbearance being shown by lenders plus the government's interventions to improve support for some struggling home-owners as contributory factors to its revised forecast.

Housing transactions and gross lending forecasts remain unchanged, at 700,000 transactions and £145 billion of gross lending. However, the outlook for net lending appears less negative than previously thought, and should fall by around £5 billion, compared with the £25 billion contraction the CML previously anticipated.

The CML observes that: "The raft of measures taken by the authorities have stabilised the economy and will sow the seeds for a recovery over time, including in the housing market. But the improvement is likely to be slow and drawn out, especially as the extensive fiscal, monetary and credit support measures are gradually unwound."